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Chapter 5: Q. 14 (page 130)

Describe the general appearance of a demand or a supply curve with infinite elasticity.

Short Answer

Expert verified

A straight line parallel to the horizontal axis.

Step by step solution

01

Step 1.  Definition

The extreme situation of infinite elasticity, also known as perfect elasticity, occurs when either the quantity demanded (Qd) or supplied (Qs) varies by an unlimited amount in response to any change in price. The supply and demand curves are horizontal in both circumstances.

02

Step 2. Explanation

In case of a demand with infinite elasticity, the demand curve would be a straight line parallel to the horizontal axis, instead of a downward sloping curve.

Similarly, the supply curve would be a straight line parallel to the horizontal axis instead of being an upward sloping curve.

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Most popular questions from this chapter

Under which circumstances does the tax burden fall entirely on consumers?

From the data in Table 5.5 about demand for smart phones, calculate the price elasticity of demand from: point B to point C, point D to point E, and point G to point H. Classify the elasticity at each point as elastic, inelastic, or unit elastic.

PointsPQ
A603,000
B702,800
C802,600
D902,400
E1002,200
F1102,000
G1201,800
H1301,600

Table 5.5

Economists define normal goods as having a

positive income elasticity. We can divide normal goods

into two types: Those whose income elasticity is less

than one and those whose income elasticity is greater

than one. Think about products that would fall into each

category. Can you come up with a name for each

category?

The supply of paintings by Leonardo Da Vinci, who painted the Mona Lisa and The Last Supper and died in 1519, is highly inelastic. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that demand for these paintings will determine the price.

When someone’s kidneys fail, the person needs to have medical treatment with a dialysis machine (unless or until they receive a kidney transplant) or they will die. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that the supply of such dialysis machines will primarily determine the price.
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